New Scandal - Wells Fargo Sued Over Unauthorized Changes to Home Loans

Now, the bank is being accused of making unauthorized changes to home loans held by customers in bankruptcy, a new class action and other lawsuits against the company claim. The lawsuit shows these unauthorized changes were being made even while the company was in the middle of dealing with its fake accounts scandal, according to an article by Gretchen Morgenson for The New York Times.

The lawsuit claims these changes seemed to benefit the borrowers in the short-term as it lowered their monthly payments, the article states. However, the fine print showed it would extend the term of the loan for decades.

From the article:Any change to a payment plan for a person in bankruptcy is subject to approval by the court and the other parties involved. But Wells Fargo put through big changes to the home loans without such approval, according to the lawsuits.

However, a spokesman for Wells Fargo denies the claims, saying the bank did notify the borrowers and the bankruptcy courts.

And while it is still unclear just how many unauthorized loan changes Wells Fargo put through, lawsuits have arisen in Louisiana, New Jersey, North Carolina, Pennsylvania and Texas.

From the article:Bankruptcy judges in North Carolina and Pennsylvania have admonished the bank over the practice, according to the class-action lawsuit filed last week. One judge called the practice “beyond the pale of due process.”